I don't know if I agree about the advertising, though there is a point to that. However, I definitely agree with the issue of sales. Even with physical copies to compete with, PSN and XBL can't be bothered to have decent sales even on par with those physical options, let alone Steam. I finally took to owning both consoles recently, XB1S and PS4P. If they went all digital, I'd go back to one. Game prices, for me, would probably about double, and I'm not interested in spending $40 on a year-old game during a "good" sale, nor do I have interest in the asinine DLC prices that never drop on those digital markets (I generally just wait for a GotY version). To hell with paying these companies more to screw us even harder. If MS and Sony can establish that their marketplaces can get closer to what Steam is, giving us decent sales year-round with bouts of great deals on occasion, I would support it, but begrudgingly (as so many games have little replay value, so I don't care to buy them digitally).
I've suggested the same thing in the past, going with USB drives. You get faster installs to the console, and the flash drive is reusable. They could push it as BYO physical media as well, so I could preferably walk in with my own external/flash storage, load it up with all my games at once, and walk out. Or, I could order online, they could load them up, then I can head over in a couple of hours. It's a solution, though not the best there could be, I suppose. The only problem is it might actually RAISE costs, if MS and Sony have to supply servers and storage to all these retailers, rather than chunks of plastic and discs.